Concept explainers
Completing the accounting cycle from
On December 1, Bob Wonder began an auto repair shop, Wonder’s Quality Automotive. The following transactions occurred during December:
Dec. 1 | Wonder contributed $55,000 cash to the business in exchange for shares of common stock. |
1 | Purchased $9,000 of equipment paying cash. |
1 | Paid $1,000 for a four-month insurance policy starting on December 1. |
9 | Paid $16,000 cash to purchase land to be used in operations. |
10 | Purchased office supplies on account, $2,900. |
19 | Borrowed $30,000 from the bank for business use. Wonder signed a note payable to the bank in t he name of the corporation. The note is due in five years. |
22 | Paid $1,200 for advertising expenses. |
26 | Paid $500 on account. |
28 | The business received a bill for utilities to be paid in January, $230. |
31 | Revenues earned during the month included $20,500 cash and $3,300 on account. |
31 | Paid employees' salaries $3,100 and building rent $1,000. Record as a compound entry. |
31 | The business received $1,050 for auto screening services to be performed next month. |
31 | Cash dividends of $3,500 were paid to stockholders. |
The business uses the following accounts: Cash; Accounts Receivable; Office Supplies; Prepaid Insurance; Equipment;
Adjustment data:
a. Office Supplies used during the month, $900.
b. Depreciation for the month, $ 150.
c. One month insurance has expired.
d. Accrued Interest Expense, $75.
Requirements
1. Prepare the journal entries, and post to the T-accounts.
2. Prepare an unadjusted trial balance.
3. Complete the worksheet for the month ended December 31, 2016. (optional)
4. Prepare the
5. Prepare an adjusted trial balance.
6. Prepare the income statement, the statement of retained earnings, and the classified balance sheet in report form.
7. Prepare the closing entries, and post to the T-accounts.
8. Prepare a post-dosing trial balance.
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Horngren's Financial & Managerial Accounting, The Financial Chapters (Book & Access Card)
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